How to deduct fair market value for your car donation

July 8, 2014 in Car Donation

Donate the car directly to the trust or charity as it can value more both the donor and the receiver. There are many intermediate agents act in between the process, where some look for their own benefits. When directly approached with charities they use your car either to help needy for their emergency move or sell it auction for rising funds through it. As a donor you can claim for exact value for your car in tax redemption by knowing the fair market value for the car.

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Where the FMV gets effective

To get the tax reduction for fair market value of your car, you need to have made your donation with charities that hold 501(c) (3) status else cannot be entitled to claim for any tax exemptions.  Some intermediates will actually deal with non-profit organizations and will fetch the bills for donation where you can claim for tax deduction. Before finalizing with the agents makes sure of the percentage what they contribute to the charities because your tax will get deducted based on the value it reaches to the charity. 

Eligibility to deduct your vehicle’s fair market value

According to the IRS 4303, the donor can deduct the fair market value for his cars if one of the following applies:

  • When the charity wants to make a “significant intervening use of the vehicle” and no permission is authorized to sell the vehicle before completion of the use.
  • When the charity wants to make a “material improvement to the vehicle”.
  • When the charity sell or give the vehicle to needy who are in need of transportation at a price lower than the fair market value.
  • When the charity sells your vehicle for $500 or less, you can claim the fair market value or the exact auction price of the car.

Know the tax exemption for your car donation

July 4, 2014 in Car Donation

When you wish to help charities by donating your cars, you might think the process is simple that can end within a single phone call. The major complicated scenario you need to check out is whether your donation reaches to the right place. Know how to identify the trusted charities and the other tax details while donating the vehicle.

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You can find many phone numbers and websites when you browse for charities.  When you decide to contribute your valuables to those unseen NGOs, there are chances to fall into some fake organizations. So it is better to find a charity that is located in your own local area for extending your support. The trustworthy charity will have a legal documentation and furnish a 501(c)(3) status to your donations. You can claim tax deduction for your donations through this status and can also inspect the status of tax exemption details through www.irs.gov or by ringing at (800) 829-3676. If you have any complaints about NGO such as not giving acknowledgements or proper bills for your contributions you can write to IRS examination division.

You need to fill up an additional form 8283 along with the IRS form if you’re claiming more than $500 as a deduction for your donated car and the written appraisal is must when your deduction exceeds more than $5,000. Make sure you receive a written acknowledgement from charity that includes charity’s name, description of the car and a policy statement.   

 
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